Govt mulls easy bank overdraft norms

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Published: April 6, 2020 5:05:49 AM

As part of the package, finance minister Nirmala Sitharaman announced the transfer of Rs 500 a month to 20.4 crore women Jan Dhan account holders for three months.

If approved, the move will benefit not just the poor (Jan Dhan account holders) but also the lower-middle-class customers.

After announcing money transfer through Jan Dhan accounts of 20.4 crore poor women to blunt the Covid-19 impact, the government may impress upon state-run banks to help improve the cash flow of individuals, many of whom are yet not covered under any relief measure.

One of the proposals being toyed with is to raise the overdraft facility automatically for customers with good credit history for a temporary period, should they wish to avail of it, a source told FE. “The proposal also includes raising the limit for Jan Dhan account holders (not just women) from the current Rs 10,000. A final decision will be taken soon,” he said.

If approved, the move will benefit not just the poor (Jan Dhan account holders) but also the lower middle-class customers, who are bereft of the PDS facilities, among others. Currently, the Jan Dhan scheme has 38.3 crore beneficiaries who hold a total of Rs 1,18,434 crore in their accounts.

Last week, the government pledged succour to the poor and the vulnerable – from BPL families, Jan Dhan account holders and construction workers to organised-sector employees – to cope with the lockdown, announcing a relief package of Rs 1.7 lakh crore.

As part of the package, finance minister Nirmala Sitharaman announced the transfer of Rs 500 a month to 20.4 crore women Jan Dhan account holders for three months. This will cost the government Rs 30,600 crore. The transfer to only women account holders was aimed at helping the intended beneficiaries (poor families) with a minimum possible leakage.

However, fears that the poor households where no woman has a Jan Dhan account will lose out on this benefit, have prompted the government to consider some relief to them, said a banking industry source. The government is also gearing up for the next round of economic measures that will likely focus on needs of specific sectors – including MSMEs, exports, tourism, civil aviation and animal husbandry – that have been battered by the Covid-19 outbreak.

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